Risky business: Who needs it?
When you purchase a risk management software package, what you are really acquiring is a system of coordination and optimization for reducing the chance of harm to your organization’s earnings potential. Fundamentally, this begins with identifying and categorizing risk. As transparency of the risk profile improves, so to does the effectiveness of treating risk. A complete risk management software suite not only provides the tools to plan for risk, but those needed to manage risk incident responses.
Corporate risk arises in many forms. Every company’s risk profile differs. Getting a grip on risk requires flexibility in accounting for risk attributes. Strong enterprise risk management software should track risk characteristics across a number of dimensions, such as:
- Type: security, quality, compliance, competition, and others.
- Origin: employees, customers, vendors, and business partners.
- Ownership: department, location, and responsible stakeholder.
Identifying the benefits of risk management software
With improved risk management, organizations can directly lower operational overhead. The right approach to managing risk can help your company:
- Avoid lawsuits, fines, and penalties via regulatory compliance,
- Reduce insurance requirements by demonstrating adherence to risk reduction standards,
- Eliminate inefficiencies in internal processes, and
- Improve credit ratings.
Similarly, risk management software promotes profitability by improving customer satisfaction and retention:
- Decrease instances of sub-standard service, sales, and support by identifying and addressing threats to each.
- Plan for delivery of service interruptions.
- Identify competitive conditions that may lead to reduced market appetite for goods and services.
Tools for all phases of the risk management life-cycle
Breaking down the risk management life-cycle provides a basis to understand what’s available in the software tools and how they can differ from each other.
- Risk identification. In order to treat risk, it must be identified. Risk management platforms offer a variety of tools designed to help with risk capture. Common tools include brainstorming tools like concept maps, interview, survey, and polling applications, as well as process modeling and story-boarding interfaces. Risk identification software is not limited to user-generated risk identification tools, though. Pre-created taxonomies and risk registers that offer libraries of selectable risks are becoming increasingly more popular. Risk registers can provide assistance in more quickly tracking risks to a more granular level.
- Risk assessment and assignment. Analyzing and assessing risk is essentially a matter of identifying of probability and impact. Probability is generally expressed as a percentage chance of an event occurring, while the optimum approach of assessing impact relies on assigning a quantifiable dollar-based cost to an event occurring. Access to historical information about impact calculations, as well as access to the underlying financial data maintained in core ERP system. or accounting modules can help create accurate quantification of risk impacts. Robust reporting tools are essential to risk assessment. Risk assignment typically coincides with the assessment phase and risk management tools need to include communication tools to effectively relate risk assignments to responsible owners.
- Risk prioritization. Reporting and dashboard tools for displaying risk prioritizations provide a means of ranking risks, allowing your company to address the most significant risks first. Visualization tools can be particularly beneficial in managing risk prioritization. Risk based heat maps and magic quadrant type displays for displaying risk prioritizations are common tools.
- Risk response planning. There are four fundamental approaches to managing risk: avoid, prevent, mitigate, and transfer. Risk response planning tools allow for the identification of risk treatment strategies. Detailed risk response planning often requires developing more in-depth processes and procedures. Document management functionality can come into play in terms of databasing risk response strategies and providing a means of communicating risk response plans. Sophisticated programs can also support and track approvals and authorizations of specific risk response strategies.
- Risk treatment and incident management. No risk management software is complete without capabilities to coordinate the business actions taken to either avoid or prevent risks or to address them when they occur. Risk treatment and incident management tools can involve scheduling functionality, communication tools, and tracking software for identifying where in the treatment process risk incidents are and the results of the actions taken.
Taking the next steps
Risk management software offers an opportunity for organizations to improve both the transparency and accountability related to risk identification and the effectiveness of mitigating negative outcomes. But the variety of risk management options on the market can be daunting for companies looking to understand which option is the most relevant.
If you are at the point where you are ready to find which risk management software options are right for you, we can help. Through a brief phone call, our software specialists will look to better understand your business and software needs to help you locate a handful of solutions suited for your specific requirements. Get started today!